August 28, 2017

Appellate Court Found Class Benefits Worthless, Meaning Case Should Have Been Dismissed Early On--$520,000 In Fees Go POOF!

Library of Congress. Wm. C. Greene, photographer. 1946

In In re Subway Footlong Sandwich Marketing and Sales Practice Litig., MDL No. 13-02439 (7th Cir. Aug. 25, 2017), a lower court had approved a settlement over an objector’s challenge in a class action claiming that Subway did not provide customers with a footlong bun. Along the way, the proof showed that minor variations in baking conditions sometimes produced an under footlong bun, but the customer still got all the meat and condiments in ordered sandwiches. Given that some buns were a foot and some were under, individualized hearings would be required to show commonality as well as possibly materiality. Class counsel then shifted from a damages class to an injunctive relief class. The parties reached a settlement where Subway agreed to measure the sandwiches and undertake other protocols but admitted it could never guarantee that an exact foot bun would be the results. It also agreed to class counsel fees capped at $520,000.

The Seventh Circuit reversed and remanded with instruction to dismiss. It found the action provided worthless benefits to the class such that it was a “racket” only providing fees to counsel.